State v. Baker

• Decision Date: 18 June 1980
• Docket Number: No. 62639,62639
• Parties: STATE of Iowa, Appellee, v. Leo M. BAKER, Appellant.
• Court: Iowa Supreme Court

Page 568

293 N.W.2d 568

STATE of Iowa, Appellee, v. Leo M. BAKER, Appellant.

No. 62639.

Supreme Court of Iowa.

June 18, 1980.

John P. Roehrick, Des Moines, for appellant.

Thomas J. Miller, Atty. Gen., Lona Hansen, Asst. Atty. Gen., and David H. Correll, Black Hawk County Atty., for appellee.

Considered by REYNOLDSON, C. J., and REES, UHLENHOPP, ALLBEE, and McGIVERIN, JJ.

REYNOLDSON, Chief Justice.

Defendant lawyer was charged with violating section 713.6, The Code 1977 ¹ ("Fraudulent conveyances"). He was convicted following trial to the court and now appeals. We affirm.

The facts developed upon this trial were similar to those submitted in defendant's disciplinary proceeding. See Committee on Professional Ethics and Conduct v. Baker, 269 N.W.2d 463 (Iowa 1978).

Defendant and W. W. Sindlinger were lawyers who formed a professional corporation which in turn was a partner in a Waterloo law firm. They, together with Wayne Mark, a realtor, owned Vi-Vim, Inc., a corporation formed to take title to real estate in order to conceal the identity of the equitable owners. These three persons formed a "Vi-Vim" partnership on September 1, 1973, through which they held the equitable ownership, in varying shares, in several real estate tracts. Two of these parcels were identified as the "Degener property" and the "Howard property." The conduct of the three partners in the acquisition and sale of the "Miller Farm" formed the basis of this action.

Nettie Miller owned the full interest in this 278.5-acre farm except for a one-seventh interest in 190 acres which was owned by several grandchildren of a deceased sister. Nettie had been under conservatorship since 1968, with Sindlinger and Audrey Zeiger, a niece, serving as co-conservators. Commencing in 1969 Nettie was so senile she could no longer live alone. She became a nursing home patient and gradually deteriorated both mentally and physically until her death at age 95 on December 17, 1975. In 1973 Wayne Mark, through Sindlinger, made a $140,000 offer to buy the Miller farm. Sindlinger wrote Zeiger the offer appeared to have "definite advantages" and she ought to give it serious consideration. Zeiger rejected this offer because she did not trust Mark and because it was too low. During all this time the farm was being rented for an unreasonably low cash rent.

Nonetheless, under Sindlinger's lead, Zeiger did consent that the farm should be sold. Sindlinger proceeded to procure deeds to Zeiger from the other fractional owners to facilitate an ultimate sale. He wrote one of these owners that she could be "assured that the people back here, that is, Nettie Miller and Audrey Zeiger who own by far the most substantial interest in the farm, will do everything they can to get the best price." At that time Nettie was senile and Zeiger was unsophisticated in the area of farm prices.

Subsequently, Mark and Sindlinger agreed to a joint purchase of the farm. In May 1975 Sindlinger asked defendant if he would like to participate. Defendant testified he agreed although he did not recall that he then was told who owned the farm, the price, or other relevant information. Later Sindlinger told defendant the owner did not want to sell to Mark and a straw man would be required. Defendant in the same month procured Richard Doerfer, a client and friend who officed in the same building.

July 2, 1975, after Sindlinger had relayed an oral offer of $200,000 which was rejected, he mailed Zeiger a written $250,000 offer, purportedly from Doerfer, which she accepted. Defendant procured Doerfer's signature on this contract, which was subject to the court's approval. Defendant testified he did not read the contract and therefore did not see that it involved a conservatorship. Upon cross-examination he testified he told Doerfer that the latter would be acting as straw man for him and Sindlinger, and that at the time Doerfer signed defendant knew the farm described was the one in which he and Sindlinger were acquiring an interest.

Later defendant signed a termination notice which was served on the farm tenant on August 20, 1975. Within 24 hours a farm neighbor, George Isley, called defendant and asked if the farm was for sale. Although the offer and acceptance were subject to court approval, defendant said he would return the call. In a day or so defendant telephoned Isley and reported the farm had been sold. He did not inquire what Isley would pay for the farm.

November 19, 1975, Sindlinger as co-conservator successfully petitioned district court for permission to sell the farm pursuant to the offer, without appraisal. The district court judge testified at this trial that he had not been told who really was buying the farm and would not have approved the sale had he known the truth. Defendant borrowed $50,000 to provide the down payment, which sum ultimately was used for that purpose.

Nettie died on December 17, 1975, before the sales contract was signed by Doerfer and before sale could be consummated through the conservatorship. Defendant testified it was not until the next day that "I am confident that I was aware" that there was a conservatorship involved; that it was the first time he had "clear cut knowledge" the farm they had purchased "was one from a client and (we) had failed to disclose that we were the purchasers." On cross-examination he admitted he knew prior to December that there was an "ethical problem." The final report in the conservatorship, filed by Sindlinger and Zeiger as co-conservators, alleged the proposed sale of real estate, approved December 12, 1975, in fact had never been consummated because the ward died before the proposed purchaser had executed the contract, "and said sale was therefore abandoned by this Conservatorship." Defendant testified that after Nettie's death he and Sindlinger discussed "that the contract should be processed through the estate."

December 18, 1975, Zeiger executed a petition to probate Nettie's will and to appoint an executor. Zeiger was appointed pursuant to the terms of decedent's will. Defendant's firm was designated as attorney. Nettie's interest in the farm was scheduled on the probate inventory at a value of $224,875.75 with the notation, "Value determined by sale being negotiated prior to decedent's death and consummated January 15, 1976, by Executor, under power of sale in decedent's will." Of course the value shown was arrived at by a pro rata elimination of the outstanding one-seventh interest in the 190 acres.

A "Uniform Real Estate Contract" dated January 15, 1976, was executed between Zeiger as executor of the estate of Nettie M. Miller as seller, and R. E. Doerfer as buyer, for a total of $224,875.75 for the estate's interest in the farm.

At trial a prosecution appraiser valued the Miller farm at $416,500 ($1495 per acre) on July 1, 1975, and $470,600 ($1687 per acre) on January 15, 1976. Valuations by several neighbors were higher. Through defendant's sophisticated sales technique, the farm was sold through the straw man Doerfer to a neighboring property owner, Vernon Luhring, for $724,100 (about $2600 per acre) on October 8, 1976. Defendant received the purchase price checks made payable to Doerfer, endorsed them as his attorney, and ran them through a "Doerfer" trust account. This sale resulted in a gain of nearly $500,000 in less than one year.

Defendant had purchased and sold real estate, and had practiced extensively in probate and farm incorporating. Contrary to defendant's contentions, trial court found him to be "very knowledgeable concerning farm values."

Attorney LeRoy Redfern examined the abstract for the purchaser Luhring. After he required the contract rather than a memorandum of purchase to be recorded, he noted the low $897.66 per acre sale price to Doerfer and knew Doerfer officed with defendant's law firm and was defendant's personal friend and client. He believed there had been an ethical violation and told defendant and Sindlinger he was going to file a complaint with the ethics committee. Defendant attempted to justify the Doerfer sale price; at a subsequent meeting he no longer sought to justify the price but sought to enlist Redfern's participation in lowering Luhring's purchase price as though he had purchased at the time of the purported Doerfer sale, indicating the excess over the Doerfer sale price would go to the "heirs."

Redfern filed a complaint with the Black Hawk County Bar Association Ethics and Grievance Committee. Baker and Sindlinger voluntarily appeared before the county committee. They admitted they and Mark were the actual purchasers and that Doerfer was a straw man. Their recorded testimony was admitted into evidence in the trial of this case over defendant's objections. Defendant contended his testimony was privileged under Iowa Sup.Ct.R. 118.18 (now 118.19) because counsel for the Committee on Professional Ethics and Conduct of the Iowa State Bar Association had requested that the testimony be taken and a transcript forwarded to the committee.

Restitution of the profit on the Luhring sale was made to Nettie's estate.

In this appeal defendant raises three broad contentions. First, he asserts trial court erred in overruling his motion to dismiss because the facts do not disclose a fraudulent conveyance in that neither Nettie Miller (the original owner of the property) nor her heirs were protected parties under the statute. Second, defendant argues trial court erred in admitting into evidence certain acts and declarations of defendant's law partner and business associate, W. W. Sindlinger, under the co-conspirator exception to the hearsay rule when the State failed to introduce preponderant independent evidence of the conspiracy's existence, and in any event such acts and declarations were pre-conspiratorial. Third, defendant alleges trial court wrongly admitted into evidence the transcript of the Black Hawk County Bar Association Ethics and Grievance Committee proceedin...